Will the Sugar Industry be Killed Like Cotton?

sugarcane_big_34 The sugar industry in the country is facing extinction as a result of myriad threats just like the cotton industry was dealt the same deadly blow and consigned to oblivion more than thirty years ago with devastating consequences.

The threats facing the survival of the multi-billion shillings sugar sub-sector can be clustered into two categories industrial market forces and artificial deliberately crafted and executed by man-made forces for personal profit.

What has clearly emerged is the fact that of all these threats, latter forces are the most deadliest and devastating behind the persistent crises that continue to plague the country’s sugar industry with no respite in sight.

Ironically just like cotton, sugarcane is the only leading cash crop in vast swathes of the former western and Nyanza provinces with tea and coffee confined to limited highland areas. The crop is virtually the sole economic backbone of these regions.

They also account for all the sugar produced in the country with ten processing facilities with four in the former Western province and the rest in former Nyanza. The sugar producing factories include the leading sugar producer Mumias Sugar Company, Nzoia, West Kenya Butali, Kibos, Soin, Chemilil, Miwani, Muhoroni and South Nyanza Sugar Company popularly known as Sony.

For decades the sugar sub-sector has been plagued by manipulations executed by mafia like cartels operatives playing politics of profit from the country’s sugar industry. These include politically well-connected and financially powerful shadowy barons operating cartels cheaply importing sugar and smuggling it into the country to rake in multi-billion shillings as well as controlling lucrative business contracts with the sugar companies.

Executing deliberate manipulations to control the boards of directors including the top management positions of all the sugar companies both private and parastatals. The private sugar companies include Mumias, West Kenya, Butali, Kibos, Soin and the defunct oldest sugar company in the country Miwani Sugar Company.

The parastatals which despite demands for privatization over the years remain Chemilil, Muhoroni which has been under receivership for more than a decade, and Nzoia sugar companies which the former Kenya Sugar Board had said that their privatization was not viable because of their poor performance.

Of all these companies the top three best performing since their inception in the 1970s have been Mumias Sugar until over the last three years when its fortunes started plummeting, followed by Chemilil and Sony sugar companies, but the rest have been plagued by perennial under performance problems right from their establishment.

The other key players in the sugar industry’s politics of profit include, the powerful regulatory authority of the industry, the Sugar Directorate formerly Kenya Sugar Board (KSB), the toothless Kenya Sugarcane Growers Association (KESGA) which most of the time was controlled by the KSB, the farmers out growers companies like the once powerful Mumias Outgrowers Company (MOCO), Nzoia’s NOCO and the now moribund Busia’s BOCO just to mention a few.

All these are crowned by the equally influential sugarcane transporters companies contracted by the sugar producing companies that transport the crop from the farmers’ farms scattered all over the former Western and Nyanza provinces to their respectful factories for processing and not to forget the sugarcane cutters who harvest the crop.

According to investigations conducted by angaza news, we established that the real controllers of this chain of sugar industry politicking for profit are the shadowy barons operating the mafia like cartels that are holding and for decades have been holding the industry in a stranglehold.

They revealed that these barons are also viciously deadly to anybody who tries to or interferes with their operations and is not receptive to being compromised to keep silent or turn his or her back to their manipulative operations.

A senior National Intelligence Security (NIS) officer who declined to be named because he is not authorized to speak to the press says: “We know these people and have accordingly filed to our superiors in Nairobi detailed reports about these characters and what they are doing in the sugar industry for further action but nothing happens. Indeed they are either directly or indirectly in control of virtually all the sugar companies in the country.”

The officer who has been stationed in the region (Western and Nyanza) for more than ten years investigating issues affecting the sugar sub-sector says the cartels’ operatives in both regions fight to control the sugar companies because of the huge profits they make from them through supplies of huge quantities of farm in-puts like fertilizer which is very expensive compared to other East African countries, farms and factories’ machineries, equipment including a wide range of other lucrative tender contracts.

“The problem does not stop there, because the cartels are the ones which import cheap sugar in huge quantities into neighbouring countries and smuggle it into the country through our porous borders. These imports be they from Sudan, South America or COMESA states are extremely cheap and by the time it hits our market to be sold at our local retailer prices, they make 100 per cent profit,” he said.

The officers says that because of these highly lucrative illicit trade the cartel’s operatives must have either direct or indirect control of the local sugar manufacturing companies to enable them to repackage the smuggled illicit sugar into the local sugar companies’ packaging materials before offloading it onto the country’s market as locally produced sugar and sold at high local prices to make a killing.

The former Mumias Sugar Company Chief Executive Peter Kebati raised an alarm that some companies which he did not name had produced imitations of the company’s sugar packaging material through which they were selling smuggled sugar purporting it to be the company’s sugar. The genuine packages and the fake ones were displayed to the media to distinguish the difference.

To emphasize how deadly the mafias like cartel barons are, the officer cited a case which occurred in the 2000/2001 soon after the government refused to renew the management contract of Mumias Sugar by the British Management firm Booker Tett Plc. The company had successfully run the company posting high level profits right from its establishment in 1976 to that period when the barons influenced change of guard.

He says that at least one senior managers was gunned down dead for resisting the change of guard at the company’s leadership, others’ lives were threatened and forced to quit their jobs and flee for their lives while one was framed for allegedly plotting murder but was later acquitted by the high court but his career at the company was completely ruined.

With the control of the sugar companies’ boards of directors and top management, it means these companies must play fiddle to the demands and whims of the barons of the cartels that are controlling them.

According to NIS sources the personalities behind these cartels are well heeled businessmen and politicians whose careers are financed by the companies. They entrenched them during retired President Daniel Arap Moi’s regime that presided over the departure of Booker Tett Plc – the only management team that presided over the consistent sterling performance of a sugar company in Kenya since independence.

According to the Western Development Initiative Association (WEDIA) – the next target in the sugar politics is either control or manipulation of the KSB board of directors and top managers. Ironically the West Kenya Sugar boss Jaswant Rai whose company is at the centre of the sugar sub-sector’s crises in western Kenya once represented millers on the KSB board.

In 2013 WEDIA which successfully petitioned President Uhuru Kenyatta and the National Assembly over the acute crisis facing the industry, with the key issues being flooding of the commodity onto the country’s market and the poaching crisis among other issues is demanding to know why the Parliamentary committee on agriculture which investigated the matter has failed to initiate the debate of the sugar report even after tabling it in parliament its findings for a way forward nearly three years ago.

Apart from regulating the sub-sector, KSB which is now the sugar directorate is also charged with the responsibility of licensing not only the establishment of sugar companies and processing facilities in the country, but also the importation of the commodity by licensed companies to meet the country’s annual deficit of more than 250, 000 tonnes.

The other critical areas for the sugar directorate are advancing the sugar companies with loans from the Sugar Fund to finance their sugarcane development programmes and other related commitments like paying sugarcane farmers for their sugarcane delivered to the factories for processing – when they are facing financial crunches.

WEDIA an independent non-profit organization which has been at the centre of the sugar industry issues for over five years consistently put the KSB which was led by the then Chief Executive Rose Mkok on the spot over a long list of actions the board took in total contravention of the Kenya Sugar Act 2011 that have either directly or indirectly contributed to the crises plaguing the sub-sector and threatening it with extinction.

WEDIA accused KSB for playing politics instead of impartially executing its legal mandate of regulating the sub-sector, licensing and financing. Its board members most of whom were elected or appointed by influence were forced to play fiddle to those who financed their election or influenced their appointment to the board.

It argued that this state of affairs compromised the mandate the KSB was charged with executing hence the crises that is crippling the industry right from the cheap sugar imports, ailing sugar companies, huge accumulated un-paid farmers’ dues for sugarcane delivered, dwindling sugarcane development funds, factories operating absolute machineries, collapsed or collapsing farmers’ out grower companies among others.

WEDIA went ahead to argue that although sugarcane growers were represented by 7 members on the KSB board which included, 3 reps for millers, agriculture ministry, director agriculture, state corporations and treasury – “they were serving the interests of the forces that influenced to get those positions and not the farmers or the sugar sub-sector.

This is where the politics of the farmers’ entities like KESGA, their out grower companies, Saccos, the transporters and the sugarcane cutters come on an extremely weakened threshold as their financial backbone or source of revenue – sugarcane has been devastated to near total destruction. Therefore the big players have effectively neutralized the power of the farmers, transporters and cane cutter.

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